Centro Acquires RealCities, Kills Network

Centro has acquired McClatchy’s RealCities, which now redirects to Centro.net. Kate Kaye at ClickZ has a nice overview of the background. Here is the key paragraph:

According to Centro Chairman and CEO Shawn Riegsecker, however, Centro isn’t buying the media properties available through the RealCities network. Instead, the firm is buying business relationships with agencies and advertisers currently working with RealCities. “We are not picking up the publisher contracts,” said Riegsecker. “We firmly believe that the network model is not the right model agencies are looking for.”

What this suggests is a big discount.

RealCities was conceptually on target but had ongoing execution challenges. As an ad network it has largely now been superseded by the Yahoo! newspaper consortium and the newspaper-owned quadrantOne. However there are a host of other local ad networks. Yet RealCities was one of the few local networks with reasonable scale, having swallowed the inventory of DotConnect Media, Lee Enterprises’ newspaper network in late 2007.

Terms of the deal weren’t disclosed. Here’s an email interview with Centro CEO Shawn Riegsecker I conducted after being alerted to the deal earlier this week:

Why did Centro buy Real Cities?

A: Real Cities has been a respected player for many years in the space. To be able to acquire this respected company and its existing base of more than 250 clients, while consolidating the industry on our one platform, and gaining McClatchy’s involvement and support for our media planning and buying platform – it all just made a lot of sense.

Did you come to believe you needed your own “inventory”?

A: Although we will be servicing Real Cities’ clients, we did not pick up their contracts with publishers. Centro will not own or be taking a stake in any inventory, we will remain an independent and objective resource for our agency partners. We have no intention of operating a network.

Does the acquisition affect Centro’s ability to work with other ad networks in any way?

A: No, we will continue to buy inventory through other ad networks when it makes sense for our clients.

Does this signal a change in the nature of the business or the model?

A: By canceling the publisher contracts and only picking up the clients, it supports our current business model and belief that the best solution for advertising agencies is an independent one-stop, software-backed solution that enables them to put together the most successful campaigns across all local publishers.

Real Cities has had mixed success in the past; how will you improve performance, participation?

A: Although more quiet in recent years than previously, Real Cities still serviced more than 250 clients in the past twelve months.

Will Centro now be competing with Yahoo’s consortium and quadrantOne for advertiser dollars and advertiser inventory?

A: Centro’s media software helps agencies quickly, easily and successfully place a media campaign across 100% of all local online websites across 100% of all their inventory including high impact placements, sponsorships and email based on advertisers’ needs. It’s a very different model than the remnant network model employed by Yahoo and quadrantOne that services only a portion of what we reach, both in terms of quantity and quality.

What’s RC’s current reach? Will Centro attempt to expand it further? How?

A: Centro will be integrating the Real Cities brand and client relationships into its organization. Centro has no intention of maintaining Real Cities’ network. We feel, and our publisher clients tell us emphatically, that a network model does not serve the industry as well as our model does. It is what has enabled us to grow as we have, and what has put us in the position we’re in today.

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In terms of reach, comScore treats Centro like an ad network and places it 23rd out of 50 in its “ad focus” ranking. RealCities was 41 by comparison. To further compare, MySpace is 27 on that list and YouTube is 30.